International Journal of Commerce and Management Research

International Journal of Commerce and Management Research


International Journal of Commerce and Management Research
International Journal of Commerce and Management Research
Vol. 3, Issue 6 (2017)

Degradation in asset quality: A Sectoral study of non-performing assets in public sector banks in India


Gagan Bhati, Dr. CK Goyal

Banking system is the most crucial sector of the economy. A robust and sound banking sector is very indispensable for overall economic development of a nation. Asset quality is the most important parameter to evaluate the financial health of the banking system. Non Performing Assets is a serious ailment associated with the banking system of India. It negatively affects the profitability and renders adverse impact on the operational efficiency of the banks and consequently leads to deterioration in asset quality. Because of the hazardous impact of economic slowdown, plenty of projects/Industries are under stress and as an outcome banking system of India has seen significant rise in the level of Gross and Net NPA in the recent past. The major portion of NPA (about 85%) belongs to Public sector banks which account about 76 percent of banking business in India. PSBs comprise SBI & its associates and nationalized banks. An attempt has been made in this paper to analyze the trends of NPA in Public sector Banks during 2009-2016. With the help of Statistical tools viz. trend analysis and average annual growth rate, level of Gross and Net NPA in SBI & Associates and Nationalized banks has been analyzed. Study found that during the 8 years of study period, level of Gross and Net NPA has shown significant increase particularly in non priority sector. It is an alarming signal to the PSBs in India and requiring serious attention.
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